Immuneering Corp 10-K

Item 8. Financial Statements and Supplementary Data Immuneering Corporation Index to Consolidated Financial Statements ​ ​ ​ Page(s) Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) 131 Consolidated Balance Sheets 132 Consolidated Statements of Operations and Comprehensive Loss 133 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) 134 Consolidated Statements of Cash Flows 135 Notes to Consolidated Financial Statements 136 ​ ​ ​ 130 Table of Contents ​ Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Immuneering Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Immuneering Corporation and its subsidiaries (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ RSM US LLP We have served as the Company's auditor since 2020. Boston, Massachusetts March 10, 2022 ​ ​ ​ ​ 131 Table of Contents PART I – FINANCIAL INFORMATION ​ Item 1. Financial Statements ​ IMMUNEERING CORPORATION ​ CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 74,888,145 ​ $ 37,090,151 Marketable securities, current ​ ​ 74,311,203 ​ ​ — Accounts receivable ​ 246,040 ​ 500,110 Prepaids and other current assets ​ 2,888,608 ​ 140,958 Total current assets ​ 152,333,996 ​ 37,731,219 ​ ​ ​ ​ ​ ​ ​ Marketable securities, non-current ​ ​ 996,560 ​ ​ — Property and equipment, net ​ 807,223 ​ 64,363 Goodwill ​ ​ 6,701,726 ​ ​ — Intangible asset ​ ​ 439,000 ​ ​ — Right-of-use assets, net ​ 5,324,198 ​ 613,103 Other assets ​ 102,129 ​ 14,333 Total assets ​ $ 166,704,832 ​ $ 38,423,018 ​ ​ ​ ​ ​ ​ ​ Liabilities, convertible preferred stock and stockholders' equity (deficit) ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 1,394,340 ​ $ 1,480,537 Accrued expenses ​ 3,965,447 ​ 698,992 Lease liabilities, current ​ 274,039 ​ 76,322 Total current liabilities ​ 5,633,826 ​ 2,255,851 ​ ​ ​ ​ ​ ​ ​ Long-term liabilities: ​ ​ Lease liabilities, non-current ​ 5,090,897 ​ 544,767 Total liabilities ​ 10,724,723 ​ 2,800,618 Commitments and contingencies (Note 13) ​ ​ Convertible preferred stock: ​ ​ Series B preferred stock, $ 0.001 par value, 0 and 6,032,183 shares authorized at December 31, 2021 and December 31, 2020, 0 and 3,619,292 shares issued and outstanding at December 31, 2021 and December 31, 2020 ​ — ​ 36,983,910 Series A preferred stock, $ 0.001 par value, 0 and 2,495,933 shares authorized at December 31, 2021 and December 31, 2020, 0 and 2,495,933 shares issued and outstanding at December 31, 2021 and December 31, 2020 ​ — ​ 21,119,940 Total convertible preferred stock ​ — ​ 58,103,850 Stockholders’ deficit: ​ ​ Preferred stock, $ 0.001 par value; 10,000,000 and 0 shares authorized at December 31, 2021 and December 31, 2020, respectively; No shares issued or outstanding ​ ​ — ​ — Class A common stock, $ 0.001 par value, 200,000,000 and 22,026,200 shares authorized at December 31, 2021 and December 31, 2020 respectively; 26,320,199 and 4,950,129 shares issued and outstanding at December 31, 2021 and December 31, 2020 ​ 26,320 ​ 4,950 Class B common stock, $ 0.001 par value, 20,000,000 and 6,032,183 shares authorized at December 31, 2021 and December 31, 2020 respectively; 0 shares issued and outstanding at December 31, 2021 and December 31, 2020 ​ — ​ — Additional paid-in capital ​ 215,276,186 ​ 3,251,240 Accumulated other comprehensive loss ​ ​ ( 49,009 ) ​ ​ — Accumulated deficit ​ ( 59,273,388 ) ​ ( 25,737,640 ) Total stockholders' equity (deficit) ​ 155,980,109 ​ ( 22,481,450 ) Total liabilities, convertible preferred stock and stockholders' equity (deficit) ​ $ 166,704,832 ​ $ 38,423,018 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 132 Table of Contents ​ IMMUNEERING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 2,079,961 ​ $ 2,311,535 ​ Cost of revenue ​ 1,153,073 ​ 1,280,325 ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 926,888 ​ 1,031,210 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ Research and development ​ 26,540,959 ​ 15,003,786 ​ General and administrative ​ 8,271,998 ​ 3,109,978 ​ Total operating expenses ​ 34,812,957 ​ 18,113,764 ​ Loss from operations ​ ( 33,886,069 ) ​ ( 17,082,554 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ Interest income ​ 169,899 ​ 42,656 ​ Other expense ​ ​ ( 127,063 ) ​ ​ — ​ Loss before income taxes ​ ​ ( 33,843,233 ) ​ ​ ( 17,039,898 ) ​ Income tax benefit ​ ​ 307,485 ​ ​ — ​ Net loss ​ $ ( 33,535,748 ) ​ $ ( 17,039,898 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share attributable to common stockholders, basic and diluted ​ ​ ( 2.46 ) ​ ​ ( 3.44 ) ​ Weighted-average common shares outstanding, basic and diluted ​ ​ 13,612,677 ​ ​ 4,950,129 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss: ​ ​ ​ ​ ​ ​ ​ Unrealized losses from marketable securities ​ ​ ( 49,009 ) ​ ​ — ​ Comprehensive Loss ​ $ ( 33,584,757 ) ​ $ ( 17,039,898 ) ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 133 Table of Contents IMMUNEERING CORPORATION ​ CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2021 AND 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible Preferred Stock ​ ​ Stockholders' Equity (Deficit) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Accumulated other ​ ​ ​ ​ Total ​ ​ Series B ​ Series A ​ Convertible ​ ​ Class A Common Stock ​ Class B Common Stock ​ Paid-In ​ comprehensive ​ Accumulated ​ Stockholders' ​ Shares Amount Shares Amount Preferred Stock Shares Par Value Shares Par Value Capital loss ​ Deficit Equity (Deficit) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2019 — $ — ​ 1,966,043 ​ $ 16,611,832 ​ $ 16,611,832 ​ ​ 4,950,129 ​ $ 4,950 — $ — ​ $ 2,164,471 ​ $ — ​ $ ( 8,697,742 ) ​ $ ( 6,528,321 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of Series A convertible preferred stock, net of issuance costs — ​ — ​ 529,890 ​ 4,508,108 ​ 4,508,108 ​ ​ — ​ — — ​ — ​ — ​ ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of Series B convertible preferred stock, net of issuance costs ​ 3,619,292 ​ ​ 36,983,910 ​ ​ — ​ ​ — ​ ​ 36,983,910 ​ ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation expense — ​ — ​ — ​ — ​ — ​ ​ — ​ — — ​ — ​ ​ 1,086,769 ​ ​ — ​ — ​ ​ 1,086,769 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ — ​ — ​ ​ — ​ — — ​ — ​ — ​ ​ — ​ ​ ( 17,039,898 ) ​ ​ ( 17,039,898 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2020 3,619,292 $ 36,983,910 ​ ​ 2,495,933 ​ $ 21,119,940 ​ $ 58,103,850 ​ ​ ​ 4,950,129 ​ $ 4,950 — $ — ​ $ 3,251,240 ​ $ — ​ $ ( 25,737,640 ) ​ $ ( 22,481,450 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of Series B convertible preferred stock, net of issuance costs 2,412,853 ​ 24,788,851 ​ — ​ — ​ 24,788,851 ​ ​ — ​ — — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of common stock upon exercise of stock options — ​ — ​ — ​ — ​ — ​ ​ 117,846 ​ 118 — ​ — ​ 354,316 ​ — ​ — ​ 354,434 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of common stock upon exercise of warrants — ​ — ​ — ​ — ​ — ​ ​ 308,308 ​ 308 — ​ — ​ 926,817 ​ — ​ — ​ 927,125 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Conversion of Preferred Stock into common stock ( 6,032,145 ) ​ ( 61,772,761 ) ​ ( 2,495,933 ) ​ ( 21,119,940 ) ​ ( 82,892,701 ) ​ ​ 11,939,281 ​ 11,939 — ​ — ​ 82,880,762 ​ — ​ — ​ 82,892,701 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of common stock upon initial public offering, net of issuance costs ( $ 2,124,317 ) — ​ — ​ — ​ — ​ — ​ ​ 8,625,000 ​ 8,625 — ​ — ​ 118,185,808 ​ — ​ — ​ 118,194,433 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of common stock for acquisition ​ — ​ — ​ — ​ — ​ — ​ ​ ​ 379,635 ​ ​ 380 ​ — ​ ​ — ​ ​ 7,874,620 ​ ​ — ​ ​ — ​ ​ 7,875,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation expense ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 1,802,623 ​ ​ — ​ ​ — ​ ​ 1,802,623 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 33,535,748 ) ​ ​ ( 33,535,748 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 49,009 ) ​ ​ — ​ ​ ( 49,009 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2021 — $ — ​ ​ — ​ $ — ​ $ — ​ ​ ​ 26,320,199 ​ $ 26,320 — $ — ​ $ 215,276,186 ​ $ ( 49,009 ) ​ $ ( 59,273,388 ) ​ $ 155,980,109 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ ​ 134 Table of Contents ​ IMMUNEERING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2021 and 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ Net loss ​ $ ( 33,535,748 ) ​ $ ( 17,039,898 ) Adjustment to reconcile to net loss to net cash used in operating activities: ​ ​ ​ Depreciation expense ​ 45,467 ​ 24,328 Right-of-use asset amortization ​ 113,605 ​ 54,977 Stock based compensation expense ​ 1,802,623 ​ 1,086,769 Net amortization of premium (accretion of discount) on marketable securities ​ ​ 130,240 ​ ​ — Deferred tax benefit ​ ​ ( 307,485 ) ​ ​ — Change in assets and liabilities: ​ ​ ​ (Increase) decrease in: ​ ​ ​ Accounts receivable ​ 279,713 ​ ( 290,170 ) Prepaid expenses and other current assets ​ ( 2,408,986 ) ​ ( 69,740 ) Other assets ​ ​ — ​ ​ ( 14,333 ) Increase (decrease) in: ​ ​ ​ Accounts payable ​ ( 130,398 ) ​ 1,185,589 Accrued expenses ​ 3,240,940 ​ 488,644 Lease liability ​ ( 80,853 ) ​ ( 46,991 ) Net cash used in operating activities ​ ( 30,850,882 ) ​ ( 14,620,825 ) Cash flows from investing activities: ​ ​ Purchases of property and equipment ​ ( 60,786 ) ​ ( 53,415 ) Purchases of marketable securities ​ ​ ( 75,625,529 ) ​ ​ — Cash acquired in business combination ​ ​ 70,348 ​ ​ — Net cash used in investing activities ​ ( 75,615,967 ) ​ ( 53,415 ) Cash flows from financing activities: ​ ​ Proceeds from the issuance of Series A preferred stock, net of issuance costs ​ — ​ 998,306 Proceeds from the issuance of Series B preferred stock, net of issuance costs ​ 24,788,851 ​ 36,983,910 Proceeds from initial public offering of common stock, net of commissions and underwriting ​ ​ 120,318,750 ​ ​ — Payment of initial public offering costs ​ ​ ( 2,124,317 ) ​ ​ — Proceeds from exercise of stock options ​ 354,434 ​ — Proceeds from exercise of warrants ​ 927,125 ​ — Net cash provided by financing activities ​ 144,264,843 ​ 37,982,216 Net increase in cash and cash equivalents ​ 37,797,994 ​ 23,307,976 Cash and cash equivalents at beginning of period ​ 37,090,151 ​ 13,782,175 Cash and cash equivalents at end of period ​ $ 74,888,145 ​ $ 37,090,151 Supplemental disclosures of noncash investing and financing information: ​ ​ Conversion of convertible Series A and B preferred stock into common stock ​ $ 82,892,701 ​ $ — Business combination non cash ​ ​ 7,804,652 ​ ​ — Class A common stock issued for business combination ​ ​ 7,875,000 ​ ​ — Reclassification of liability for Series A preferred stock ​ ​ — ​ ​ 3,509,802 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 135 Table of Contents IMMUNEERING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ Note 1 – Organization and Nature of Business Immuneering Corporation, a Delaware corporation, (“Immuneering” or the “Company”) was incorporated in 2008. The Company aims to improve patient outcomes by advancing a unique pipeline of oncology and neuroscience product candidates developed using the Company’s translational bioinformatics platform. The Company has more than a decade of experience applying translational bioinformatics to generate insights into drug mechanism of action and patient treatment response. Building on this experience, the Company’s disease-agnostic discovery platform enables the Company to create product candidates based on 1) biological insights that are both counterintuitive and deeply rooted in data, and 2) novel chemistry. On October 30, 2019, Immuneering formed a wholly owned subsidiary, Immuneering Securities Corporation (“ISC”), a Massachusetts securities corporation, for the sole purpose of buying, selling and holding securities on the Company’s behalf. On December 22, 2021, the Company acquired all outstanding shares of capital stock of BioArkive, Inc. (“BioArkive”), a California corporation, which as a result became a wholly owned subsidiary. Immuneering, ISC and BioArkive are collectively referred to as “the Company” throughout these consolidated financial statements. The Company is subject to a number of inherent risks associated with any biotechnology company that has substantial expenditures for research and development. These risks include, but are not limited to, the need to obtain adequate additional funding, possible failure of clinical trials or other events demonstrating lack of clinical safety or efficacy of its product candidates, dependence on key personnel, reliance on third-party service providers for manufacturing drug product and conducting clinical trials, the ability to successfully secure its proprietary technology, and risks related to the regulatory approval and commercialization of a product candidate. There can be no assurance that the Company’s research and development program will be successful. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees, advisors, and consultants. On August 3, 2021, the Company completed its initial public offering (“IPO”) pursuant to which it issued and sold 8,625,000 shares of its Class A common stock, inclusive of 1,125,000 shares of its Class A common stock sold pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $ 120,318,750 , after deducting underwriting discounts and commissions, but before deducting offering costs payable by the Company, which were $ 2,124,317 . Upon the closing of the IPO, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock. Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital (see Note 8). To date, the Company has funded its operations through service revenues, and with proceeds from the sale of its capital stock and convertible notes and, most recently, with proceeds from the IPO. The Company has incurred recurring losses over the past several years and as of December 31, 2021, the Company had an accumulated deficit of $ 59,273,388 . The Company expects to continue to generate operating losses for the foreseeable future. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurances that additional funding will be available on terms acceptable to the Company, or at all. If the Company is unable to raise additional funds when needed, it may be required to delay, reduce the scope of, or eliminate development programs, which may adversely affect its business and operations. Management considers that there are no conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern and estimates that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the consolidated financial statements. The full extent to which coronavirus (“COVID-19”) pandemic will directly or indirectly impact the Company’s business, results of operations and financial 136 Table of Contents condition, including expenses and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and its variants and the actions taken to contain or treat COVID-19 and its variants, as well as the economic impact on local, regional, national and international markets. The Company has considered potential impacts arising from the pandemic related to COVID-19 and its variants and is not presently aware of any events or circumstances that would require the Company to update its estimates, judgements or revise the carrying values of its assets or liabilities. ​ ​ Note 2 - Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB sets generally accepted accounting principles (“GAAP”) to ensure the consolidated financial statements are consistently reported. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codifications (“ASC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Stock Split On July 23, 2021, the Company approved a one -for-1.4 stock split which was consummated in connection with the Company’s IPO. All information in the accompanying financial statements and notes thereto regarding share amounts of common stock, price per share of common stock and the conversion factor for Series A and Series B Preferred Stock into common stock have been adjusted to reflect the application of the stock split on a retroactive basis. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting periods. These estimates and assumptions are based on current facts, historical experience and various other factors believe to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets, liabilities and the recording of expenses that are not readily apparent from other sources. Significant estimates reflected in these consolidated financial statements included but are not limited to, the research and development expenses, determination of fair value of stock-based awards, the valuation of common stock prior to the IPO, business combination, and the right-to-use assets and operating lease liability. Actual results may differ materially and adversely from these estimates. Segments ​ Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company’s chief executive officer is the CODM, and he uses consolidated financial information in determining how to allocate resources and assess performance. The Company has determined that it operates in one segment. ​ ​ ​ ​ ​ ​ ​ ​ 137 Table of Contents Business Combination ​ Results of operations of acquired companies are included in the Company’s results of operations as of the respective acquisition dates. Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired Company are expensed as incurred. The operating results of the acquired business are reflected in the consolidated financial statements after the date of acquisition. ​ If the acquired net assets do not constitute a business under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill is recognized. Refer to Note 6, Business Combination for more information. ​ Cash and Cash Equivalents ​ Cash and cash equivalents are comprised of deposits at major financial banking institutions and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash is maintained at Federal Deposit Insurance Company (“FDIC”) insured financial institutions. At times, the Company has maintained cash in excess of FDIC limits, however it has not experienced any losses with respect to its cash balances. The Company regularly monitors the financial condition of the institutions in which it has depository accounts and believes the risk of loss is minimal. ​ Marketable Securities ​ Our marketable securities are classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities and are recorded at fair value. Unrealized gains/(losses) are included as a component of accumulated other comprehensive loss in the consolidated balance sheets and statements of convertible preferred stock and stockholders’ equity (deficit) and a component of total comprehensive loss in the consolidated statements of comprehensive loss, until realized. The Company assesses its available-for-sale marketable securities for impairment on a quarterly basis. There were no impairments of the Company’s available-for-sale marketable securities measured and carried at fair value during the year ended December 31, 2021. Realized gains and losses are included in other expense on a specific-identification basis. There were no realized gains or losses on marketable securities for the year ended December 31, 2021. Fair Value Measurements ​ We record cash equivalents and marketable securities at fair value. ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Our financial assets, which include cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services or other observable market data. The pricing services utilize industry standard valuation models, including both income and market based approaches, and observable market inputs to determine value. After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of December 31, 2021. Fair value 138 Table of Contents information for these assets, including their classification in the fair value hierarchy is included in Note 4 Fair Value Measurements . ​ There have been no changes to the valuation methods during the year ended December 31, 2021. We evaluate transfers between levels at the end of each reporting period. ​ The carrying amounts reflected in the consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate their respective fair values because of the short-term maturity of those financial instruments. ​ Accounts Receivable ​ Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is estimated for those accounts receivable considered to be uncollectible based upon historical experience and management’s evaluation of outstanding accounts receivable. Bad debts are written off against the allowance when identified. At December 31, 2021 and 2020 there was no allowance for doubtful accounts. ​ Concentration of Credit Risk ​ Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of accounts receivable and revenue. To manage accounts receivable credit risk, the Company continuously evaluates the creditworthiness of its customers and the need for an allowance for potential credit losses. The Company has not experienced any losses in such accounts. ​ The following customers comprised 10% or more of the Company’s total accounts receivable or revenues as of or for the period ended December 31, 2021 (customers with an asterisk are less than 10%): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2021 ​ As of December 31, 2021 ​ Revenue % of Total Accounts Receivable % of Total Customer #1 ​ $ 745,030 35.8 % $ 235,500 95.7 % % Customer #2 ​ ​ 380,000 18.3 ​ ​ * ​ * ​ Customer #5 ​ ​ 353,050 17.0 ​ ​ * * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2020 ​ As of December 31, 2020 ​ Revenue % of Total Accounts Receivable % of Total Customer #1 ​ $ 676,710 29.3 % $ 214,345 42.9 % Customer #2 ​ ​ 570,000 24.7 ​ ​ 71,250 14.2 ​ Customer #3 ​ ​ 306,900 13.3 ​ ​ * * ​ Customer #4 ​ ​ 250,880 10.9 ​ ​ 63,000 12.6 ​ Customer #5 ​ * * ​ ​ 91,975 18.4 ​ ​ Property and Equipment ​ Property and equipment are recorded at cost, net of accumulated depreciation. Expenditures for major replacements and improvements are capitalized, while expenditures for general repairs and maintenance are expensed as incurred. Upon retirements or disposition of property and equipment, the related cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is recorded in the consolidated statement of operations. Depreciation is calculated using the straight-line method once assets are placed in service. ​ ​ ​ 139 Table of Contents ​ ​ ​ ​ ​ Estimated Asset Class ​ Useful Lives Computer equipment 3 years Furniture and fixtures 5 years Lab equipment ​ 7 years Leasehold improvements ​ 1 - 10 years ​ Impairment of Long-lived Assets Periodically, the Company evaluates its long-lived assets, which consist primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. To date, no impairments have occurred. ​ Leases ​ In February 2016 the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”), a standard issued to increase transparency and comparability among organizations related to their leasing activities. This standard established a right-of-use model that requires the recognition of right-of-use assets and lease liabilities for most leases as well as provides disclosure with respect to certain qualitative and quantitative information related to a company’s leasing arrangements to meet the objective of allowing users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ​ The Company adopted the leasing standard using the modified retrospective transition approach as of January 1, 2020, with no restatement of prior periods or cumulative adjustment to retained earnings. Upon adoption, the Company elected the package of transition practical expedients, which allowed the Company to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, and initial direct costs for existing leases. The Company also made an accounting policy election to not recognize leases with an initial term of 12 months or less within its consolidated balance sheets, and to recognize those lease payments on a straight-line basis in its consolidated statements of operations over the lease term. The adoption of the leasing standard did not have an impact on the consolidated statement of operations. ​ The Company determines if an arrangement is a lease at contract inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date of the lease based upon the present value of future lease payments over the expected lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate, which is based on rates that would be incurred to borrow on a collateralized basis over a term equal to the lease payments in a similar economic environment, in determining the present value of lease payments. ​ The Company has elected not to separate lease and non-lease components as a single lease component. The Company’s lease are reflected in right-of-use assets and lease liabilities (current and non-current) in the consolidated balance sheets. ​ Revenue Recognition ​ In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods and services. The core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in 140 Table of Contents an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following five-step model: • Identify the contract with a customer ​ • Identify the performance obligations in the contract ​ • Determine the transaction price ​ • Allocate the transaction price to the performance obligations in the contract ​ • Recognize revenue when or as performance obligations are satisfied ​ ​ The Company’s contracts generally consist of the promise to provide computational biology professional services to pharmaceutical and biotechnology companies, which the Company has concluded constitutes one performance obligation that is delivered over time. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the services to the customer. The Company’s contracts provide for either agreed upon rates per hour based on the level of the professional working on the project or a fixed fee for a defined scope of work. The Company recognizes revenue over time by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress, which depicts the performance in transferring control of the associated services to the customer. The Company uses input methods to measure the progress toward the complete satisfaction of performance obligations and evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment. ​ The Company’s contract terms do not allow for a right of return or refund and do not contain significant financing components. Receivables associated with the contract will generally be collected within thirty to sixty days, in accordance with the underlying payment terms. ​ Income Taxes ​ The Company provides for income taxes in accordance with ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates and laws in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based upon the weighted available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. ​ The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves (i.e., unrecognized tax benefits) that are considered appropriate as well as the related net interest. As of December 31, 2021 and 2020, the Company had uncertain tax positions of $ 380,902 and $ 174,950 . The Company has classified the unrecognized tax benefits as reductions of its tax credit carryforwards. ​ Research and Development ​ Research and development costs are expensed as incurred. Research and development costs consist of expenses incurred in performing research and development activities, including salaries and benefits, materials and supplies, preclinical expenses, stock-based compensation expense, depreciation of equipment, contract services, and other outside expenses. The Company also incurs costs to develop software programs for internal use in identifying potential human drug targets which may then lead to the development of human drug candidates. To date the software programs have primarily been used for internal research and development activities and the costs incurred have been expensed as research and development. 141 Table of Contents ​ Research and Manufacturing Contract Costs and Accruals The Company has entered into various research, development and manufacturing contracts with research institutions and other companies in the United States. These agreements are generally cancelable, and related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research, development and manufacturing costs. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of period end. Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress towards completion of the research, development and manufacturing activities, invoicing to date under the contracts, communication from the research institutions and other companies of any actual costs incurred during the period that have not yet been invoiced and the costs included in the contracts. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made by the Company. The historical accrual estimates made by the Company have not been materially different from the actual costs. Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Com prehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds from the offering, either as a reduction of the carrying value of the preferred stock or in stockholder’s equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the statements of operations and comprehensive loss. There were no deferred offering costs as of December 31,2021 or December 31, 2020. Net Income (Loss) per Share Prior to the closing of the IPO, the Company followed the two-class method when computing net income (loss) per share, as the Company had issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents. 142 Table of Contents The Company’s convertible preferred stock contractually entitled the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Subsequent to the closing of its IPO, the Company only has one class of shares outstanding and basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock awards. For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for each of the years ended December 31, 2021 and 2020. Stock-based Compensation ​ The Company issues stock-based awards to employees and nonemployees in the form of stock options. The Company accounts for stock-based awards in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”), which requires all stock-based payments to employees and nonemployees, including grants of employee stock options and modifications to existing stock options, to be recognized in the consolidated statement of operations based on their fair values. The fair value of options is estimated on the grant date using the Black-Scholes option-pricing model (“Black-Scholes”). Black-Scholes requires the Company to make assumptions and judgments about the variables used in the calculation including the expected term of its stock option, the volatility of the Company’s common stock, and an assumed risk-free interest rate. The Company uses the simplified calculation of expected life and volatility is based on an average of the historical volatility of a group of publicly traded companies in a similar industry that the Company believes would be considered a peer group had it been a publicly held company for the duration of the expected life of the award. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Forfeitures are recognized as they occur. No dividend yield was assumed as the Company does not pay, and does not expect to pay, dividends on its common stock. The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgement. In accordance with ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, compensation expense for stock-based awards granted to nonemployees is recognized over the period during which services are rendered by such nonemployees. The new standard largely aligns the accounting for share-based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share-based transactions, as long as the transaction is not effectively a form of financing. There was no adjustment to the financial statements upon adoption of this standard as of January 1, 2020. As there had been no public market for the Company’s common stock prior to the IPO, the estimated fair value of its common stock has been determined by its board of directors as of the date of each option grant, with input from management, considering the Company’s most recently available third-party valuations of common stock and its board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Each valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to the Company’s common stock at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale. 143 Table of Contents The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if the Company had used different assumptions or estimates, the fair value of its common stock and its stock-based compensation expense could be materially different. Goodwill Goodwill represents the excess of the fair value of the acquiree over the recognized bases of the net identifiable assets acquired and includes the future economic benefits from other assets that could not be individually identified and separately recognized. Goodwill is not amortized, but instead is periodically reviewed for impairment and an impairment charge is recorded in the periods in which the recorded carrying value of goodwill exceeds its fair value. On a quarterly basis, the Company performs a review of its business to determine if events or changes in circumstances have occurred which could have a material adverse effect on the fair value of the Company and its goodwill. If such events or changes in circumstances were deemed to have occurred, the Company would perform an impairment test of goodwill as of the end of the quarter and record any noted impairment loss. The goodwill test is performed at least annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs its annual impairment test during the fourth quarter of each fiscal year. There were no impairments in 2021. Intangible Assets Intangible assets are recognized at fair value, as an asset apart from goodwill if the asset (i) arises from contractual or other legal rights, or (ii) is separable. Intangible assets, principally representing technology acquired, are capitalized and amortized on the straight-line method over their expected useful lives. The Company reviews the recoverability of its long-lived assets (including amortizable intangible assets), other than goodwill, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (“JOBS Act”). The Jobs Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to avail itself of this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. In 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements. The new standard, as amended, requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) will become effective for the Company on January 1, 2023. The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements. 144 Table of Contents In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements. The amendments are effective for annual reporting periods beginning after December 15, 2020 with early adoption permitted. The adoption of this standard did not have a material impact to the financial statements. In January 2017, the FASB issued ASU No. ASU 2017-04, Intangibles—Goodwill and Other (Topic 350 ) , which eliminates Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). This update is effective for annual and interim impairment tests performed in periods beginning after December 15, 2022. Early adoption of the standard is permitted. The Company is currently evaluating the new guidance and assessing the potential impact on its consolidated financial statements. ​ Note 3 – Marketable Securities Marketable securities as of December 31, 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Amortized Cost Unrealized Gains Unrealized Losses Fair Value Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasuries ​ $ 42,147,385 ​ $ - ​ $ ( 28,575 ) ​ $ 42,118,810 Government securities ​ ​ 19,218,057 ​ ​ - ​ ​ ( 13,689 ) ​ ​ 19,204,368 Commercial Paper ​ ​ 12,992,165 ​ ​ 57 ​ ​ ( 4,197 ) ​ ​ 12,988,025 Total Current ​ ​ 74,357,607 ​ ​ 57 ​ ​ ( 46,461 ) ​ ​ 74,311,203 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-current: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasuries ​ ​ 999,186 ​ ​ - ​ ​ ( 2,626 ) ​ ​ 996,560 Government securities ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total Non-current ​ ​ 999,186 ​ ​ - ​ ​ ( 2,626 ) ​ ​ 996,560 Total marketable securities ​ $ 75,356,793 ​ $ 57 ​ $ ( 49,087 ) ​ $ 75,307,763 ​ ​ There were no marketable securities as of December 31, 2020. There were no impairments of the Company’s available-for-sale marketable securities measured and carried at fair value during the year ended December 31, 2021. Realized gains and losses are included in other expense on a specific-identification basis. There were no realized gains or losses on marketable securities for the year ended December 31, 2021. ​ 145 Table of Contents Note 4 – Fair Value Measurements The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 ​ ​ Level 2 ​ ​ Level 3 ​ ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market ​ $ 33,961,344 ​ $ - ​ $ - ​ $ 33,961,344 Commercial paper ​ ​ - ​ ​ 2,000,000 ​ ​ - ​ ​ 2,000,000 Total cash equivalents ​ ​ 33,961,344 ​ ​ 2,000,000 ​ ​ - ​ ​ 35,961,344 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasuries ​ $ 43,115,370 ​ $ - ​ $ - ​ $ 43,115,370 Government securities ​ ​ - ​ ​ 19,204,368 ​ ​ - ​ ​ 19,204,368 Commercial paper ​ ​ - ​ ​ 12,988,025 ​ ​ - ​ ​ 12,988,025 Total marketable securities ​ ​ 43,115,370 ​ ​ 32,192,393 ​ ​ - ​ ​ 75,307,763 Total cash equivalents and marketable securities ​ $ 77,076,714 ​ $ 34,192,393 ​ $ - ​ $ 111,269,107 ​ There were no transfers between Level 1 and Level 2 and we had no financial assets or liabilities that were classified as Level 3 at any point during the year ended December 31, 2021. There were no marketable securities as of December 31, 2020. Note 5 – Property and Equipment, net Property and equipment, net consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 ​ ​ ​ ​ ​ ​ ​ Computer equipment ​ $ 281,666 ​ $ 174,317 Furniture and fixtures ​ 84,477 ​ 18,798 Lab equipment ​ ​ 463,182 ​ ​ - Leasehold improvements ​ 152,117 ​ - Total ​ 981,442 ​ 193,115 Accumulated depreciation ​ ( 174,219 ) ​ ( 128,752 ) Property and equipment, net ​ $ 807,223 ​ $ 64,363 ​ Depreciation expense totaled $ 45,467 and $ 24,328 for the year ended December 31, 2021 and 2020, respectively. Note 6 – Business Combination BioArkive Acquisition On December 22, 2021, the Company completed the acquisition of all outstanding shares of capital stock of BioArkive, Inc., a California corporation (“BioArkive”), for a market value of $ 8.75 million. BioArkive is a San Diego based contract research organization that has previously provided preclinical research services and biosample storage to the Company and other biotechnology companies. BioArkive is in the process of being fully integrated into the Company to exclusively support the Company's internal preclinical research activities for its oncology pipeline. In connection with the acquisition, the Company has assumed the obligations under BioArkive’s three lease agreements. 146 Table of Contents The purchase price was paid by Immuneering through the issuance of an aggregate of 379,635 shares of Immuneering’s Class A common stock. The number of shares of common stock issued was calculated using a value based on the average of the daily volume weighted average prices of the common stock on the Nasdaq Stock Exchange for the 30 -trading day period ending on and including the trading day immediately prior to the closing date. The sellers of BioArkive are restricted from selling these shares for a 6 month period from the date of the acquisition. As such, we estimated that there was an approximate 10 % discount for the lack of marketability of the shares. The fair value of the purchase price in the acquisition has been preliminarily estimated to be $ 7,875,000 . Prior to the acquistion, Brett Hall, Chief Scientific Officer of Immuneering and the Founder and Chairman of the board of directors of BioArkive, held the majority of the outstanding shares of BioArkive capital stock. BioArkive provided contract services to the Company. Research and development expenses in the consolidated statement of operations include the cost of services provided by BioArkive to the Company which amounted to $ 4,548,780 in 2021 through date of the acquisition and $ 2,744,051 in 2020. As of December 31, 2020, $ 279,153 was owed to BioArkive and is included in accounts payable or accrued contract research expenses in the consolidated balance sheets. Assets Acquired and Liabilities Assumed at Fair Value The BioArkive Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination to be recognized at their fair values as of the acquisition date. As of December 31, 2021, certain amounts relating to working capital have not been finalized. The finalization of these matters could result in changes to goodwill. Intangible Assets The estimated fair value of the intangible assets was determined using the relief from royalty approach. Goodwill Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected cost savings of the combined company and assembled workforce. One of the key factors that contributes to the recognition of goodwill, and a driver for the Company's acquisition of BioArkive, is the planned investment in the internal preclinical research activities for our oncology pipeline. Goodwill recognized as a result of this acquisition is non-deductible for income tax purposes. Pro forma results are not presented for this acquisition as they are not material to the consolidated results of the Company’s operations. ​ ​ ​ ​ ​ ​ ​ ​ ​ Preliminary Valuation Weighted Average Life Cash ​ $ 70,348 ​ ​ ​ Other currents assets ​ ​ 225,790 ​ ​ ​ Other long term assets ​ ​ 87,796 ​ ​ ​ Property, plant and equipment, net ​ ​ 727,539 ​ ​ ​ Right of use assets ​ ​ 4,824,700 ​ ​ ​ Intangible asset ​ ​ ​ ​ ​ ​ Technology ​ ​ 439,000 ​ ​ 15 years Goodwill ​ ​ 6,701,726 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets acquired ​ ​ 13,076,899 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable, accrued expenses and other liabilities ​ ​ 69,714 ​ ​ ​ Deferred tax liabilities ​ ​ 307,485 ​ ​ ​ Lease liabilities ​ ​ 4,824,700 ​ ​ ​ Net assets acquired ​ $ 7,875,000 ​ ​ ​ ​ ​ 147 Table of Contents Note 7 – Accrued Expenses Accrued expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 ​ ​ ​ ​ ​ ​ ​ Accrued professional services ​ $ 250,977 ​ $ 269,302 Accrued employee expenses ​ 2,917,282 ​ 163,668 Accrued contract research expenses ​ 585,416 ​ 266,022 Accrued other ​ ​ 211,772 ​ ​ — Total ​ $ 3,965,447 ​ $ 698,992 ​ ​ ​ Note 8 – Convertible Preferred Stock Series A Preferred Stock In September 2019, the Company authorized the sale and issuance of up to 1,987,979 shares of Series A Preferred Stock, $ 0.001 par value per share, at an original issuance price of $ 8.5514 per share. In January 2020, the number of shares authorized for the Series A Preferred Stock was increased to 2,495,933 shares. The Series A Preferred Stock financing was structured to be issued in rolling closes during 2019 and 2020. On September 20, 2019, the Company issued an additional 1,122,458 shares of Series A Preferred Stock for gross cash proceeds of $ 9,598,847 and issued 785,706 shares of Series A Preferred Stock in conjunction with the conversion of the outstanding amount of the Convertible Notes. In 2019, the Company incurred issuance costs of $ 200,587 in connection with this offering. The Company received funds for issuance of an additional 468,315 shares of Series A Preferred Stock for gross cash proceeds of $ 4,004,975 through December 31, 2019. Of these shares, 410,436 shares of Series A Preferred Stock for gross cash proceeds of $ 3,509,802 exceeded the authorized amount allowed by the articles of incorporation, resulting in a liability of $ 3,509,802 and a total of 1,966,043 shares of Series A Preferred Stock outstanding at December 31, 2019. In January 2020, the shares that were previously classified as a liability as of December 31, 2019 were reclassified to temporary equity upon the approved increase to authorized shares of Series A Preferred Stock. In January 2020, the Company issued 119,454 additional shares of Series A Preferred Stock for gross cash proceeds of $ 1,021,413 . The Company incurred issuance costs of $ 23,610 in connection with the financing in January 2020. Series B Preferred Stock In December 2020, the Company authorized the sale and issuance of up to 6,032,183 shares of Series B Preferred Stock, $ 0.001 par value per share, at an original issuance price of $ 10.2782 per share. The Series B Preferred Stock financing was structured to close in two tranches. The first tranche closed in December 2020 and the Company issued 3,619,292 shares of Series B Preferred Stock for gross cash proceeds of $ 37,199,929 . The Company incurred issuance costs of $ 216,019 in connection with the financing in December 2020. The Company determined the right of the investors to purchase 2,412,853 shares of Series B Preferred Stock in the second tranche does not meet the definition of a freestanding financial instrument as it is not separable from the Series B Preferred Stock issued in the first tranche. The issuance of the second tranche is subject to the Company meeting certain development milestones or at the election of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock which must include one specific shareholder (the “Requisite Holders”). Each holder of Series B Preferred Stock may elect to purchase their requisite shares of the second tranche at any time. As of March 31, 2021, the Company had not met these development milestones nor did the Requisite Holders elect to purchase the second tranche prior to meeting these milestones and therefore no shares of the second tranche were issued. 148 Table of Contents In April and May 2021, all 2,412,853 shares of the second tranche of Series B Preferred Stock were issued based on the voluntary election of substantially all of the holders of Series B Preferred Stock. The Company received gross proceeds of $ 24,799,786 . The Company incurred issuance costs of $ 10,935 in connection with the second tranche of Series B Preferred Stock. The rights and preferences of the Series A Preferred Stock and Series B Preferred Stock (“Preferred Stock”) were as described below: Conversion Each share of Preferred Stock may be converted at any time, at the option of the holder, into shares of Class A common stock, subject to the applicable conversion rate as determined by dividing the original issue price by the conversion price. The conversion price for the Series A Preferred Stock and Series B Preferred Stock (as may be adjusted for certain customary dilutive events) is $ 6.1081 and $ 7.3416 , respectively. The Preferred Stock automatically convert into shares of Class A common stock at the then effective conversion rate upon the closing of a public offering of the Company’s securities with gross proceeds to the Company of at least $ 75,000,000 and a share price of at least $ 7.3416 or at the election of the holders of the Requisite Holders. Holders of Series B Preferred Stock that would beneficially own at least 9.9 % of any then outstanding class of equity securities may elect to receive a portion of their converted Series B Preferred Stock as Class B common stock upon conversion. Upon the closing of the IPO on August 3, 2021, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock. Dividends Preferred Stockholders are entitled to receive per annum dividends of 7 % of the original issue price share, payable only when, as and if declared by the Board of Directors. The right to receive these dividends is not cumulative, and therefore, if not declared in any year, the right to receive such dividends shall terminate and not carry forward into the next year. As of December 31, 2021 and December 31, 2020, no dividends had been declared. Voting Rights Preferred Stock and common stock vote together as one class on an as converted basis. Common stock voting rights on certain matters are subject to the powers, preferences, and rights of the Preferred Stock. Preferred Stockholders are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock held by such holder are then convertible. As long as 2,132,029 shares of Preferred Stock are outstanding, certain actions such as mergers, acquisition, liquidation, dissolution, wind up of business, and deemed liquidation events, must be approved by the holders of at least a majority of the then-outstanding shares of Preferred Stock. Liquidation Preference Upon liquidation, dissolution, or winding up of business, holders of Preferred Stock are entitled to receive a liquidation preference in priority to holders of common stock at the original respective Preferred Stock issue price for such series. If assets available for distribution are insufficient to satisfy the liquidation payment to holders of Preferred Stock in full, assets available for distribution will be allocated among holders of Preferred Stock on a pari passu basis at an amount per share equal to the greater of the respective original Preferred Stock issue price for such series plus any declared but unpaid dividends or such amount had all shares been converted to common stock. When holders of Preferred Stock are satisfied in full, any excess assets available for distribution will be allocated ratably among common stock holders based on their pro rata shareholdings. Upon a deemed liquidation event, as defined in the articles of incorporation, holders have the option to redeem their shares at the liquidation payment amounts summarized above. 149 Table of Contents Redemption Other than described above, the shares of Preferred Stock are not redeemable. Note 9 - Common Stock The Company had 200,000,000 authorized shares of Class A common stock, $ 0.001 par value per share as of December 31, 2021 and 22,026,200 authorized shares of Class A common stock, $ 0.001 par value per share as of December 31, 2020, respectively, of which 26,320,199 and 4,950,129 were issued and outstanding , respectively. The holders of Class A common stock are entitled one vote for each share of common stock. Dividends may be paid when, and if declared by the Board of Directors, subject to the limitations, powers and preferences granted to the Preferred Stockholders and on a proportionate basis with holders of Class B common stock. As of December 31, 2021 and December 31, 2020, the following number of shares of Class A common stock have been reserved: ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 ​ ​ ​ ​ ​ Conversion of Series A Preferred — 3,494,306 Conversion of Series B Preferred — 5,066,995 Exercise of common stock warrants — 308,308 Exercise of common stock options 2,859,544 1,801,263 ​ 2,859,544 10,670,872 ​ The Company had 20,000,000 authorized shares of Class B common stock, $ 0.001 par value per share as of December 31, 2021 and 6,032,183 authorized shares of Class B common stock, $ 0.001 par value per share as of December 31, 2020, of which no shares have been issued nor are outstanding. The holders of Class B common stock have no voting rights. Dividends may be paid when, and if, declared by the Board of Directors, subject to the limitations, powers and preferences granted to the preferred stockholders and on a proportionate basis with holders of Class A common stock. Common Stock Warrants During 2019, the Company issued warrants to purchase an aggregate of 308,308 shares of Class A common stock at an exercise price of $ 3.01 per share to several advisors, including 200,984 shares to entities related to members of the Board of Directors of the Company, in lieu of cash payments. These warrants vested immediately upon issuance, became exercisable on January 9, 2021 and have a 10-year term set to expire on January 9, 2030. The Company evaluated the terms of these warrants and determined that equity classification was appropriate. As of December 31, 2020, no warrants had been exercised. During June 2021, all warrant holders exercised their warrants to purchase an aggregate of 308,308 shares of common stock. As of December 31, 2021, there were no warrants outstanding. Initial Public Offering On August 3, 2021, the Company completed its initial public offering pursuant to which it issued and sold 8,625,000 shares of its Class A common stock, inclusive of 1,125,000 shares of its Class A common stock sold pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $ 120,318,750 , after deducting underwriting discounts and commissions, but before deducting offering costs payable by the Company, which were $ 2,124,317 . Upon the closing of the IPO, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock. Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital. On August 3, 2021 in connection with the closing of the IPO, the Company filed a restated certificate of incorporation, which amended and restated the Company’s certificate of incorporation to, among other things: (i) increase the number of 150 Table of Contents authorized shares of common stock to 200,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock, par value $ 0.001 per share, and (ii) authorize 10,000,000 shares of Preferred Stock; and (iii) authorize the Board of Directors to establish the rights, preferences and restrictions on any unissued series of Preferred Stock. Note 10 - Net Loss Per Share Attributable to Common Stockholders Basic and diluted net loss per share attributable to common stockholders was calculated at December 31, 2021 and 2020 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Numerator: ​ ​ Net loss ​ $ ( 33,535,748 ) ​ $ ( 17,039,898 ) ​ Denominator - basic and diluted: ​ ​ ​ Weighted-average common shares outstanding, basic and diluted ​ 13,612,677 ​ 4,950,129 ​ Net loss per share - basic and diluted ​ $ ( 2.46 ) ​ $ ( 3.44 ) ​ ​ The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares) at December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ Series A Preferred — 3,494,306 Series B Preferred — 5,066,995 Warrants to purchase common stock — 308,308 Options to purchase common stock 2,859,544 1,801,263 Total shares of common stock equivalents 2,859,544 10,670,872 ​ ​ Note 11 – Stock-Based Compensation During 2015, the Company established the Long Term Incentive Plan (“Incentive Plan”), under which incentive stock options, nonqualified stock options, restricted stock or other awards may be awarded to employees, directors or consultants of the Company. The options typically vest over a four-year period. As of December 31, 2021, the maximum number of shares available for issuance under the Incentive Plan was 2,825,173 shares. Upon the effectiveness of the Company’s 2021 Incentive Award Plan, the Company ceased granting awards under the Incentive Plan. However, the Incentive Plan continues to goven awards outstanding thereunder. On July 23, 2021, the Company’s Board of Directors adopted, and on July 23, 2021 its stockholders approved, the 2021 Incentive Award Plan (the “2021 Plan”), which became effective on July 29, 2021. The 2021 Plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares reserved for issuance under the 2021 Plan was initially equal to 2,590,000 plus an annual increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) 4 % of the aggregate number of shares of Class A common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as determined by the Board of Directors. No more than 15,350,000 shares of Class A common stock may be issued under the 2021 Plan upon the exercise of incentive stock options. Shares issued under the 2021 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares. If an award under the 2021 Plan expires, lapses or is terminated, exchanged for or settled in cash, surrendered, repurchased, cancelled without having been fully exercised/settled or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new grants under the 2021 Plan. In addition, shares subject to stock options issued under the Incentive Plan may become available for issuance under the 2021 Plan to the extent such stock options are canceled, forfeited, exchanged, settled in cash or 151 Table of Contents otherwise terminated. As of December 31, 2021, there were 2,298,432 shares available for future issuance under the 2021 Plan. On July 23, 2021, the Company’s Board of Directors adopted, and on July 23, 2021 its stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective on July 29, 2021. A total of 250,000 shares of Class A common stock were initially reserved for issuance under this plan. The number of shares of Class A common stock that may be issued under the 2021 ESPP will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) 1 % of the shares of Class A common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as determined by the board of directors, provided that not more than 3,340,000 shares of Class A common stock may be issued under the 2021 ESPP. As of December 31, 2021, no shares had been issued under the 2021 ESPP. During the year ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $ 1,802,623 and $ 1,086,769 , respectively. As of December 31, 2021, compensation expense remaining to be recognized for outstanding stock options was $ 8,403,600 and to be recognized over a weighted-average period of 2.93 years. The fair value of options granted is calculated on the grant date using the Black-Scholes option valuation model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer public companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For the year ended December 31, 2021, the Company granted 1,452,462 shares of stock options at a weighted-average grant date fair value of $ 6.29 . For the year ended December 31, 2020, the Company granted 343,169 shares at a weighted-average grant date fair value of $ 3.06 . The Company used the following assumptions in its application of the Black-Scholes option pricing model for grants during the year ended December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 ​ ​ ​ ​ ​ Weighted-average risk-free interest rate ​ 0.89 % - 1.71% ​ 0.36 % - 1.45 % Expected term (in years) ​ 5.83 - 10 years ​ 5.92 - 10 years Expected dividend yield ​ 0 % ​ 0 % Expected volatility ​ 66.76 % - 80.99 % ​ 67.30 % - 80.85 % ​ The following table summarizes the stock option activity during the year ended December 31, 2021 under the Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ Weighted- ​ Average ​ ​ ​ ​ ​ ​ ​ Average ​ Remaining ​ ​ ​ ​ ​ Number of ​ Exercise Price ​ Contractual ​ Aggregate ​ ​ Options ​ per Share Term (in Years) ​ Intrinsic Value ​ ​ ​ Outstanding at of December 31, 2020 1,801,263 ​ $ 3.01 ​ ​ Granted 1,452,462 ​ ​ 10.07 ​ ​ ​ Exercised ( 117,847 ) ​ ​ 3.01 ​ ​ ​ Cancelled ( 276,334 ) ​ ​ 3.58 ​ ​ ​ Outstanding at December 31, 2021 2,859,544 ​ $ 6.55 ​ 8.30 ​ $ 27,615,466 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested and exercisable at December 31, 2021 1,102,543 ​ $ 3.01 7.14 ​ $ 14,507,723 Vested and expected to vest at December 31, 2021 ​ 2,859,544 ​ $ 6.55 8.30 ​ $ 27,615,466 ​ 152 Table of Contents For the year ended December 31, 2021 and 2020, the Company recognized share-based compensation expense recognized on the accompanying consolidated statements of operations as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ $ 103,329 ​ $ 108,027 ​ Research and development ​ 768,679 ​ 503,111 ​ General and administrative ​ 930,615 ​ 475,631 ​ Total ​ $ 1,802,623 ​ $ 1,086,769 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note 12 – Income Taxes A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate are as follows: ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 Statutory federal income tax rate 21.0 % 21.0 % State tax, net of federal benefit 5.5 % 6.3 % Permanent differences ( 0.6 ) % ( 1.5 ) % Federal research and development credits 5.6 % 4.5 % State research and development credits 0.4 % 0.6 % Uncertain tax positions ​ ( 0.6 ) % ( 1.0 ) % Other differences 0.7 % ( 2.6 ) % Change in valuation allowance ( 31.1 ) % ( 27.3 ) % Effective income tax rate 0.9 % 0.0 % ​ As of December 31, 2021 and 2020, the components and tax effects of each type of item that gave rise to the net deferred tax assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 Deferred tax assets: ​ ​ Stock-based compensation expense ​ $ 373,602 ​ $ 73,984 Unrealized losses ​ ​ 12,990 ​ ​ — R&D credit carryforward ​ 3,346,097 ​ 1,574,596 NOL carryforward ​ 14,699,524 ​ 5,525,123 Gross deferred tax assets ​ 18,432,213 ​ 7,173,703 Valuation allowance ​ ​ ( 17,677,899 ) ​ ( 7,127,448 ) Net deferred tax assets ​ 754,314 ​ 46,255 Net deferred tax liabilities: ​ ​ Prepaid expenses deducted for tax ​ ( 425,755 ) ​ ( 28,671 ) Tax depreciation in excess of book ​ ( 328,559 ) ​ ( 17,584 ) Total deferred tax liabilities ​ ( 754,314 ) ​ ( 46,255 ) Net deferred taxes ​ $ — ​ $ — ​ Federal net operating losses (“NOL”) generated in tax years ended after December 31, 2017 are limited to 80% of taxable income, only carried forward and carried forward indefinitely under the Internal Revenue Code (“IRC”). The Company recorded a deferred tax liability of $ 304,485 on the acquisition of BioArkive. It had pre-existing deferred tax assets for which there was a fuill valuation allowance. As a result of the taxable temporary differences recognized in the business combination, the Company released $ 304,485 of its valuation allowance and recognized the income tax benefit in the income statement at the acquisition date in accordance with ASC 740 There was no income tax expense or benefit in 2020. The Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period. At December 31, 2021, the Company has federal and state NOLs of $ 56,544,731 and $ 51,310,112 , 153 Table of Contents respectively all generated after the tax year ended December 31, 2017. At December 31, 2021, the Company has federal and state research and development credit carryforwards, $ 3,034,827 and $ 394,013 , respectively, that start to expire beginning in 2025. ​ As the Company has not yet achieved profitable operations, management believes the tax benefits as of December 31, 2021 did not satisfy the realization criteria set forth in ASC Topic 740, Income Taxes and, therefore, has recorded a full valuation allowance for the entire deferred tax asset. The valuation allowance increased in 2021 by $ 10,550,451 due to the increase in the deferred tax assets by the same amount, primarily due to NOL and research and development credit carryforwards. ​ Utilization of the U.S. net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, some amounts are being presented as an uncertain tax position. ​ As of December 31, 2021 and 2020, the Company had uncertain tax positions of $ 380,902 and $ 174,950 which have been classified as reductions of its tax carrforwards. The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2021 and 2020. ​ As of December 31, 2021 and 2020, unrecognized tax benefits were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 Beginning balance ​ $ 174,950 ​ $ 96,952 Increase due to current year tax position ​ ​ 205,952 ​ ​ 77,998 Ending balance ​ $ 380,902 ​ $ 174,950 ​ The Company files tax returns in the United States including California, New York, Pennsylvania, Massachusetts and Texas. All tax years from 2017 to 2021 remain open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (“IRS”) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax years. ​ On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2019, 2020, and 2021 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The enactment of the CARES Act resulted in increased federal and state research and development carryforwards from 2013 through 2018 of $ 93,437 and decreased federal NOL of $ 759,794 from 2018. ​ 154 Table of Contents Note 13 – Commitments and Contingencies Operating Leases The Company leases office space in Cambridge, Massachusetts, New York, New York and as of July 2021, San Francisco, California, pursuant to short-term arrangements. The Cambridge and San Francisco leases are on a month-to-month basis, requiring one month’s notice before termination. The New York lease is renewable on a quarterly basis and the last renewal extended the lease term until March 31, 2022. These lease agreements include payments for lease and non-lease components and the Company has elected to not separate such components and these payments were recognized as rent expense. As of December 31, 2021, total future minimum lease payments for its short-term leases in Cambridge, Massachusetts, New York, New York and San Francisco, California was $ 30,840 due in 2022. The Company leases storage space for its electronic data equipment in Somerville, Massachusetts. This lease is renewable on an annual basis effective every March 1st. Prior to December 31, 2021, the Company renewed the lease through March 31, 2022. As of December 31, 2021, total future minimum lease payments for this lease were $ 3,569 due in 2022. In October 2020, the Company entered into an office lease in San Diego, California with a lease term of 67 months . At the lease commencement date, a right-to-use asset and lease liability was recognized by the Company for $ 637,863 . As part of the BioArkive acquisition, the Company assumed the obligations of three leases in San Diego, California, one is for 38,613 square feet of office and laboratory space, under a lease that terminates on April 30, 2032, a second is a 6,100 square feet of office and laboratory space under a lease that terminates on December 31, 2022, and third is a lease for 4,760 square feet of office and laboratory space under a lease that terminates on March 31, 2024. As a result, we recorded right-to-use assets and lease liabilities of $ 4,824,700 on the acquisition date of December 22, 2021. Future minimum lease payments for operating leases with initial or remaining terms in excess of one year at December 31, 2021 were as follows ​ ​ ​ ​ ​ ​ Amount 2022 ​ $ 659,990 2023 ​ 880,121 2024 ​ 894,044 2025 ​ 906,839 2026 ​ 819,210 Thereafter ​ ​ 4,467,246 Total future lease payments ​ 8,627,450 Less: Imputed interest ​ 3,262,514 Total lease liabilities ​ $ 5,364,936 Current portion lease liabilities ​ ​ 274,039 Lease liabilities, noncurrent ​ 5,090,897 Total lease liabilities ​ $ 5,364,936 ​ 155 Table of Contents Quantitative information regarding the Company’s leases for the year ended December 31, 2021 and 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Lease costs: ​ ​ ​ ​ Operating lease cost ​ $ 160,872 ​ $ 66,652 Short-term lease cost ​ 258,357 ​ 252,796 Variable lease cost ​ — ​ 14,700 Total lease costs ​ $ 419,229 ​ $ 334,148 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ Operating cash flows from operating leases ​ $ 111,527 ​ $ 58,666 Operating cash flows from short-term leases ​ 236,700 ​ 252,796 ​ ​ $ 348,227 ​ $ 311,462 Weighted-average remaining lease term - operating leases ​ 9.62 years ​ 5.33 years Weighted-average discount rate - operating leases ​ 9.7 % ​ 6.0 % ​ As the Company’s leases typically do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Litigation From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities and may be exposed to litigation in connection with its products and operations. The Company’s policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. When it is probable that future expenditures will be made and can be reasonably estimated the Company will accrue a liability for such matters. Significant judgement is required to determine both probability and estimated amount. The Company is not aware of any material legal matters. Clinical Research Contracts The Company may enter into contracts in the normal course of business with clinical research organizations for clinical trials, with contract manufacturing organizations for clinical supplies, and with other vendors for preclinical studies, supplies and other services for our operating purposes. These contracts generally provide for termination with a 30-day notice. ​ ​ 156 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.